- The Mexican peso weakened 0.14% while the feeling of risk aversion and benefits weigh before the Fed policy decision.
- The US data are mixed, with strong industrial production but weak housing figures, while Trump’s commercial rhetoric eclipses economic launches.
- The economic deceleration of Mexico is in the focus, with aggregate demand data and private spending scheduled before the Banxico meeting of March 27.
The Mexican peso (MXN) lost ground against the US dollar (USD) on Tuesday while operators prepare for the monetary policy of the United States Federal Reserve (FED) on Wednesday. The US data were mixed, although they were eclipsed by the commercial rhetoric of US President Donald Trump. The USD/MXN is traded at 19.94, rising 0.14%.
The mood on the market became pessimistic as investors seemed to make profits before the Fed meeting. The participants expect the Fed to maintain their position while observing whether it will adopt moderate or hard line bias in their forecasts in the summary of economic projections (SEP).
Previously, US data revealed that industrial production improved, however, housing data were mixed. However, the main engine remains Trump’s policies and geopolitical developments.
In Mexico, the National Institute of Geography and Informatics Statistics (INEGI) will publish the aggregate demand data and private spending, each on Wednesday and Thursday. This could show how deep is the slowdown in Mexico’s economy a week before the Monetary Policy Meeting of the Bank of Mexico (Banxico) of March 27.
What moves the market today: the Mexican weight cuts the profits of Monday before the Fed meeting
- The Organization for Economic Cooperation and Development (OECD) said that the tariffs of US President Donald Trump about Mexican products could cause a recession in Mexico.
- The OECD updated its forecasts, which include 25% tariffs applied to most goods from April. The OECD projects that Mexico’s economy will be severely affected, contracted 1.3% in 2025 and 0.6% next year.
- Last Wednesday, Mexican finance minister Edgar Amador Zamora said the national economy is expanding but shows signs of deceleration linked to commercial tensions with the US.
- The US industrial production grew by 0.7% monthly in February, exceeding 0.2% expectations and accelerating from the 0.3% increase in January, driven by the strength in the production of motor vehicles.
- Housing data presented a mixed panorama. Construction permits fell 1.2%, from 1,473 million to 1,456 million. However, construction beginnings increased by 11.2%, rising from 1.35 million to 1,501 million, pointing out a stronger construction activity.
- The monetary market has discounted 61 basic relaxation points by the Fed in 2025, which has led to the yields of the US Treasury bonds, they fall along with the US currency.
Technical perspective of the USD/MXN: The Mexican weight goes back while the USD/MXN rises above 19.90
The USD/MXN records anemic profits, however, the exotic pair is maintained below the figure of 20.00, suggesting that more falls are expected. The price action forms a ‘severestone doji’, which implies that bassists are in charge. The relative force index (RSI) is in bassist territory but suggests that buyers stopped the downward trend near the range of 19.90 – 20.00.
A rupture of 19.90 would exacerbate a fall to challenge the simple mobile average (SMA) of 200 days in 19.65. Once exceeded, the following key support levels would be 19.50, 19.00 and the minimum of August 20, 2024 in 18.64.
On the contrary, if the USD/MXN recovers above 20.00, this would clear the way to try the 100 -day SMA in 20.35.
Mexican weight FAQS
The Mexican weight (MXN) is the most commercialized currency among its Latin American peers. Its value is widely determined by the performance of the Mexican economy, the country’s central bank policy, the amount of foreign investment in the country and even remittance levels sent by Mexicans living abroad, particularly in the United States. Geopolitical trends can also affect MXN: for example, the Nearshoring process (or the decision of some companies to relocate the manufacturing capacity and supply chains closer to their countries of origin) is also considered a catalyst for the Mexican currency, since the country is considered a key manufacturing center in the American continent. Another catalyst for MXN is oil prices, since Mexico is a key exporter of the raw material.
The main objective of the Central Bank of Mexico, also known as Banxico, is to maintain inflation at low and stable levels (in or close to its 3%target, the midpoint of a tolerance band between 2%and 4%). To do this, the bank establishes an adequate level of interest rates. When inflation is too high, Banxico will try to control it by raising interest rates, which makes the indebtedness of homes and companies more cooling, thus cooling the demand and the economy in general. The highest interest rates are generally positive for Mexican weight (MXN), since they lead to higher yields, which makes the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken the MXN.
The publication of macroeconomic data is key to evaluating the state of the economy and can have an impact on the valuation of the Mexican weight (MXN). A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only attracts more foreign investment, but it can encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this fortress is accompanied by high inflation. However, if the economic data is weak, the MXN is likely to depreciate.
As an emerging market currency, the Mexican weight (MXN) tends to rise for periods of risk, or when investors perceive that the general market risks are low and, therefore, are eager to participate in investments that carry a higher risk. On the contrary, the MXN tends to weaken at times of market turbulence or economic uncertainty, since investors tend to sell higher risk assets and flee to the most stable safe shelters.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
